Analyst Dale Lai of DBS maintained a Buy rating on ESR-REIT (CGIUF – Research Report), retaining the price target of S$0.34.
Dale Lai has given his Buy rating due to a combination of factors surrounding ESR-REIT’s potential for growth and its strategic financial positioning. The REIT’s extensive portfolio, which includes over 80 industrial properties and investments across Singapore and Australia, provides a solid base for expansion. In particular, ESR-REIT’s successful merger in April 2022 has established it as the fifth-largest industrial S-REIT, valued at approximately S$5.5 billion. Despite this significant growth, the stock has not yet experienced a re-rating, offering an attractive yield that is roughly 200 basis points higher than that of its large-cap peers. Dale Lai believes that the REIT’s ongoing asset recalibration strategy following the merger will be value accretive and will likely lead to a re-rating of the share price.
Furthermore, ESR-REIT is actively repositioning and rejuvenating its portfolio. This effort includes divesting non-core assets and reinvesting the proceeds into higher yielding opportunities, as well as undertaking redevelopment projects and asset enhancement initiatives (AEIs) that are expected to drive organic growth. Impressively, ESR-REIT is backed by a sponsor with a substantial pipeline of approximately US$2.0 billion, enabling it to make acquisitions that are accretive to its earnings. This includes the recent acquisition of a modern logistics facility in Japan, which is projected to generate approximately 3% of yield. Dale Lai’s assessment reflects confidence in ESR-REIT’s strategic initiatives and its potential for continued growth and increased shareholder value.
CGIUF’s price has also changed slightly for the past six months – from $0.195 to $0.213, which is a 9.23% increase.
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ESR-REIT (CGIUF) Company Description:
ESR-REIT is a Singapore-based industrial real estate investment trust that invests directly or indirectly in income-producing real estate and real estate-related assets, which are used primarily for industrial, warehousing and logistics purposes. The Trust operates through the leasing of investment properties segment. Its properties range from logistics, warehousing, light industrial, general industrial to car showroom and workshop.
